I was reading the WSJ the other day and came across this. I haven't fully researched this thing, but on the surface it looks legitimate. No more tax forms, no more SS/Medicare withholdings, you keep your entire paycheck (ie: you earn $10/hr and work 40hrs, you take home 400. end of story)

instead everything pools into one huge sales tax (~23% plus individual state sales taxes) and the money is divvied into SS/Medicare/etc from there. Wave goodbye to accountants, the IRS, April 15, and all the other useless and annoying crap associated with paying taxes. Thoughts?


FAQ: http://tinyurl.com/ooglw
Homepage: http://www.fairtax.org

[Edited on July 21, 2006 at 10:55 AM. Reason : info]

7/21/2006 10:47:54 AM

oh man, the liberals are gonna hate you on here

7/21/2006 10:50:43 AM

i got a refund check for $1 two weeks ago

i can't say goodbye to thrills like that

7/21/2006 10:54:02 AM

Terminate.

7/21/2006 10:58:16 AM

the FAQ explains quite bit. don't knock it til you've read it

7/21/2006 11:02:39 AM

Steve Forbes already tried it and not enough people voted for him

7/21/2006 11:02:57 AM

There are several obvious issues:

1.) Why is this any better than what we have now? We still need to raise the same amount of revenue. Either my taxes will actually go up or my taxes will be shifted onto someone else. Experiece tells me my taxes will probably go up.

2.) It shifts tax burden farther onto the poor and middle class. This is because the rich spend a much smaller portion of their income and thus are taxed on roughly the same income as the middle class (ie you may earn 100X more than me but only spend 4X as much as me).

3.) Making a change this drastic could have serious consequences. It would be difficult to phase this plan in because you can't have some people paying sales tax and others still paying income tax.

4.) It's regressive in the sense that significantly increasing the sales price of goods will reduce consumption, causing the rate to rise, causing consumption to reduce...

[Edited on July 21, 2006 at 11:09 AM. Reason : ?]

[Edited on July 21, 2006 at 11:11 AM. Reason : ?]

7/21/2006 11:06:05 AM

I think very few people actually look at their pay stubs and realize how much the money the government collects from them individually and realize how much the government collects as a whole. A national sales tax will make it blatantly obvious, and put pressure on the government to become more economical. Therefore, it'll never happen simply because of the loss of power to the government.

^ I haven't read the articles, but I thought there was something set up to still collect income tax on income above and beyond a certain amount.

[Edited on July 21, 2006 at 11:15 AM. Reason : ]

7/21/2006 11:13:12 AM

I THINK WE WOULD STILL HAVE AN APRIL 15TH

7/21/2006 11:14:40 AM

Quote :

"I think very few people actually look at their pay stubs and realize how much the money the government collects from them individually and realize how much the government collects as a whole. A national sales tax will make it blatantly obvious"

why dont people just look at their pay stubs

7/21/2006 11:15:12 AM

Because, in the aggragate, people are stupid and lazy.

7/21/2006 11:16:30 AM

^x5 Actually this bill was written by economists if I remember correctly. so they probably thought of that already. But:

1) America spends $250+ billion each year in tax forms, accountants, and compliance with tax laws

2) with this, there is NO tax to pay (corporate, income, or any other taxes), and everyone receives a rebate each year for basic necessities. So rich person A spends $5million on houses/yachts/etc and gets taxed, then gets ~$4000 rebate. Poor person B spends $40,000 on housing/food/etc, and receives $4000 rebate. the difference is clear. (ref: FAQ#13&14)

3) It's all a moot point because no one is paying taxes in the first place and would even have to send anything in. the government get's their money automatically when you buy your goods, and that's the end of it. And since no one is paying income tax in the first place, it's as fair as can be.

[Edited on July 21, 2006 at 11:20 AM. Reason : -]

[Edited on July 21, 2006 at 11:26 AM. Reason : -]

7/21/2006 11:18:34 AM

i think all the CPAs in the country, as well as large corporations like H&R Block as well as all the thousands of government employees in the IRS would lobby against this

7/21/2006 11:21:03 AM

^good. Then maybe they'll be forced to do something more productive. Not an insult against them, but for the system to be set up such that they are necessary is a huge drain on the national economy.

7/21/2006 11:23:11 AM

Here's something to consider:

- Essentiallyall of us on TWW have received more in services from the gov't than we have paid in taxes.

- Most people receive more in services from the gov't in their lifetime than than they pay in taxes.

Judging from some other countries, more Americans would benefit from higher taxes (i.e. nationalized healthcare) than lower taxes. Some of you have been suckered into this moral argument that they are stealing your hard earned money, when in fact you are making money on the deal.

7/21/2006 11:23:34 AM

No one has ever posted this topic ever before in Soap Box. Ever.

This is innovative stuff right here.

7/21/2006 11:24:57 AM

Quote :

"good. Then maybe they'll be forced to do something more productive. Not an insult against them, but for the system to be set up such that they are necessary is a huge drain on the national economy."

i dont think the best way to help make society as a whole work more productive jobs is to eliminate hundreds of thousands of jobs

7/21/2006 11:26:06 AM

READ THE FAQ FOLKS!! It's all there!!


^I'm guessing this bill will create jobs, rather than eliminate them (yes, that's in the FAQ as well #17,20&31)

[Edited on July 21, 2006 at 11:38 AM. Reason : -]

7/21/2006 11:31:22 AM

^ i dont think 17 or 31 addresses what he was saying. this topic has been done to death as well.

we dont need to read the faq when we've discussed it for PAGES, but only a search for FAIRTAX would have let you know that.

http://thewolfweb.com/message_topic.aspx?topic=382141

[Edited on July 21, 2006 at 11:41 AM. Reason : .]

7/21/2006 11:40:57 AM

It's not all in the FAQ. That is a pro fairtax web page. I'd be surprised if the numbers even add up. Show me something objective.

7/21/2006 11:41:35 AM

Why don't we just cut all this incremental tax hike crap and just get to point... 100% of your paycheck goes to Uncle Sam and he decides what you get back

7/21/2006 11:45:44 AM

We had an interesting thread back in January on the FairTax. I'm glad to see new folks are getting interested in the bill.

The FairTax (H.R.25 and S.25) is a bill currently waiting for a vote. When passed, it would eliminate the federal individual and corporate income tax, The alternative minimum tax, social security withholding tax, capital gains tax and medicare tax. It would replace these taxes with a 23% inclusive consumption tax on all new goods and all services. The tax would not be imposed on used goods.

The Fairtax has features that will appeal to both liberals and conservatives....

Quote :

" "Liberal Arguments Better Tax Relief For The Poor - The FairTax does more to relieve the heavy burden of taxes on the poor than any other tax plan in our nation's history. Those of you who have traditionally supported a strongly graduated income tax to help relieve the impoverished need look no further. The FairTax Plan provides a tax prebate every month that completely relieves individuals and families living at or below the poverty level from paying taxes. That's right; 100% tax-free living at or below the poverty level. No other tax strategy has so strongly empowered the lower classes to climb their way towards earning a dignified living. Provides A Direct Incentive to Improve Low Income Neighborhoods - The FairTax Plan is a national sales tax on new goods and services. That means that the although the cost of buying a new home will not likely be much higher than it is today, there will be a new found savings in purchasing a refurbished home. Some developers will observe a direct incentive to stop clear-cutting natural lands and focus efforts on rebuilding and improving existing structures...and where will they turn? Lower income neighborhoods. The same run-down neighborhoods that have been all but invisible to developers in years past. For the first time in decades, it will make solid financial sense to develop and improve existing properties in many of America's lower income areas. There will also be an added emphasis on quality and robust construction, as many homeowners will learn to appreciate the resale advantages of refurbished homes. Better For The Environment - As a national sales tax on new goods and services, the FairTax Plan creates a direct disincentive for heavy, wasteful consumption of "throw away" products. Americans will once again learn to appreciate the value of durable high quality goods much like many of our European counterparts. It may even be worth your while to get that nice quality blender fixed rather than buying a new disposable one. Quality, not quantity, will be on the mind of consumers once again...and less quantity, means less waste. The FairTax simply promotes a culture that is more likely to recycle and reuse. Promotes Social Equality – The FairTax treats all Americans exactly the same. The wealthy will no longer be able to take advantage of loopholes or use expensive tax attorneys and accountants to, as some have said, “cheat” their way out of paying taxes. Reduces Political Corruption & Corporate Lobbying – The FairTax Plan eliminates the incentive for corporations to lobby politicians for special tax advantages. Corporations will no longer collect taxes under the FairTax plan. Eliminating these special interests means that politicians are less likely to vote with their corporate supporters in mind, and more likely to vote in the best interest of their voter base. Improves Political Productivity – All of the time congress currently wastes wrestling over tax related issues will be available to solve the real issues facing of our time. Congress will have to make notable progress on social issues to have bragging rights; a feat far more impressive than simply touting how they “lowered” this tax and “fixed” that tax. Conservative Arguments More Privacy in Personal and Financial Affairs – With the FairTax, the government will no longer have the right to intrude into many of the personal and financial affairs of American citizens. Its nobody’s business how much money you give, will, or get from family and friends. Aside from the suspicion of illegal activity, the government will no longer have the right to scrutinize over where you work, how you made your money, how much you have, and what you spend it on. Promotes Family Values – Under the FairTax Plan, marriage no longer carries any tax consequences. Removing the financial incentives to marriage restores the dignity and sanctity of the act. Furthermore, the tax incentives associated with retaining custody of children from divorced marriages will no longer play a role. The decisions regarding the future of such children ought to depend solely upon their best interests. Protects Personal Liberties – Under the FairTax, the IRS, which is currently exempt from the provisions of the 4th Amendment, will no longer exist. The fundamental rights afforded by the 4th amendment that prevent unlawful search and seizure were a core philosophy of our founding fathers. Empowers Private Businesses – The FairTax Plan will allow private businesses to employ help with far less paperwork. Employers will also have a great deal of flexibility when it comes to employment arrangements. Hiring workers on a trial basis will demand less of an investment. A more open labor market will result in higher productivity." "

The bill is gaining more congressional sponsors everyday. The FairTax group held a rally a few months ago in Atlanta. Another rally is planned for Orlando for Sat July 29.
More Info here: http://580wdbo.com/event_guide/fairtax/index.html

Good discussion group on the FairTax here: http://fairtaxgroups.com/index.php

Congressman John Linder's book "The FairTax Book", now in paperback, was a NY Bestseller. It does a good job of explaining the benefits of the FairTax. An easy, quick read.

Some quickie responses to Patman:

Quote :

"It shifts tax burden farther onto the poor and middle class."

Quote :

" It's regressive..."

No. The Pre-bate feature of the FairTax bill completely removes the poor from federal tax responsibility. They pay zero fed tax. Everyone recieves a monthly pre-bate check to cover the sales tax on purchases up to the pverty level. For example, a family of 3 would recieve about $441 per month to cover their fed. sales tax up to the poverty level. The pre-bates would eventually be done through a rechargable debit card.

Quote :

"Making a change this drastic could have serious consequences"

Creating a revolution and bringing the United States into existance was a totaly drastic move. Women's Suffrage and Civil Rights were daunting projects, but we followed through because it was more right than drastic. Not doing something that would benefit all Americans because it might be difficult is not a sufficient reason.

[Edited on July 21, 2006 at 11:47 AM. Reason : .]

7/21/2006 11:46:06 AM

^x3 True, As I stated in the beginning, I haven't gotten a chance to fully research this. But I read through it, thought it was interesting, and just thought I'd put it out there and see what people thought about it. I personally think it's a pretty cool idea, but to each their own i suppose... *shrug*

[Edited on July 21, 2006 at 11:49 AM. Reason : -]

7/21/2006 11:48:59 AM

This is such a cool plan!

It's revenue neutral, lowers corporate taxes, lowers taxes on the upper class, and middle and lower class taxes stay the same!

It's magic!

and

[Edited on July 21, 2006 at 12:59 PM. Reason : .]

7/21/2006 12:58:02 PM

Quote :

"i dont think the best way to help make society as a whole work more productive jobs is to eliminate hundreds of thousands of jobs"

Sure it is. These jobs are utterly unproductive - they don't, in any way, make society more wealthy. They are a cost, plain and simple.....a cost mandated by inept government.

It would be better if the government paid half the tax structure to dig holes, and the other half to fill them in. Sure, it's not producing wealth for anyone and it's still a cost, but at least while they're being a cost, the system doesn't actively preven other people from making money, too. That is what the current tax system does - makes people go to work who aren't producing anything, and while they're not producing anything, they are keeping productive members of society from producing as much wealth as possible. And they get paid (sometimes very well) for this. It's an utter waste. Get rid of it.

Point - those employed because of our current tax structure are more of a burden to wealth-creation in society than if they were simply digging holes only to fill them again. They are not just dead weight that industry must bear, they are a force pulling backward.

[Edited on July 21, 2006 at 2:45 PM. Reason : d]

7/21/2006 2:43:16 PM

What are you new? You've had 18 posts to get caught up on the happenings in political thinking over the past 20 years. You should have seen this shit millenia ago.

7/21/2006 4:08:27 PM

Quote :

"Some of you have been suckered into this moral argument that they are stealing your hard earned money, when in fact you are making money on the deal."

How dare you question ethics when you're doing making a killing on it?

Seriously, is that your real argument?

7/21/2006 4:11:04 PM

As always, I'm the lone voice proclaiming a 23% sales tax as a bad idea only because it is being collected all at once. The urge to sneak the car/stereo/TV out the back door of the store is too much. It would be much better if we instead made it a Value Added Tax. The relative effect of sneaking the TV out the back door would then be no more than 5%.

Yes, instead of just retailers we would need every productive enterprise to file a tax return, but the level of corruption by those filling will be dramatically reduced.

Income Tax: requires every working human to file: 115 million returns
negatives: does not tax criminals, liers, illegals, and is prone to government largess, requires an army of IRS agents

VAT Tax: requires every productive enterprise to file: 6 million returns (made-up)
negatives: does not tax criminal businesses, requires a small contengent of IRS agents

Sales Tax: requires every retail/sales enterprise to file: 1 million returns (made-up)
negatives: does not tax criminal businesses, rediculously strong urge to avoid the tax, requires a tiny contengent of IRS agents

7/21/2006 5:00:43 PM

Didn't someone mop the floor with the fiartax people in the old thread?

7/21/2006 5:11:19 PM

i've read a little about the VAT before, and would like to see it investigated further.

i'd go for the FairTax over the clusterfuck we have right now, though.

i mean, what's the worst that can happen? it doesn't generate enough money, and we spend more than we generate, so we're right back to square one.




of course, i'm hoping that, in the long run, the clusterfuck we have now will be financially advantageous for me, simply because it's an easier bullet to dodge once you have enough money to hire good CPAs. I also plan having my own corporation as a tax shelter.

[Edited on July 21, 2006 at 5:12 PM. Reason : ^not really]

7/21/2006 5:11:38 PM

Seems like it was Kris, but I just occasionally lurked.

7/21/2006 5:14:16 PM

well, kris would be vehemently opposed to it, and for good reason given his socialist/communist ideology. that doesn't mean he "mopped the floor" with them, though.

7/21/2006 5:16:51 PM

If we need to keep the income tax, we should at least get rid of withholding.

When people have to write one big check for 20-40% of their earnings, the truth will hit them.

7/21/2006 5:24:51 PM

yeah, that would help

and i hate the idea of the same money getting taxed once when you earn it, taxed again when you spend it, taxed again when you invest it, and taxed again when you die.

7/21/2006 5:26:46 PM

the tax code as it stands now is the most confusing pile of shit ever invented by man, id rather have the sheriff of nottingham coming around stealing coins from my pockets then the BS we have now

[Edited on July 21, 2006 at 5:34 PM. Reason : .]

7/21/2006 5:33:12 PM

Quote :

"If we need to keep the income tax, we should at least get rid of withholding. "

If we didn't have withholding there would be thousands of people unable to pay what they owed.

7/21/2006 5:44:35 PM

^ Then we should lower tax rates to compensate.

7/21/2006 5:57:15 PM

OH I GOT AN IDEA. NOBODY PAYS TAXES AND THE POOR STILL GET A REBATE. EVERYBODY WINS!

7/21/2006 6:04:51 PM

Quote :

"well, kris would be vehemently opposed to it, and for good reason given his socialist/communist ideology"

It has nothing to do with my ideology, it's simply the fact that economically speaking, it ass-screws all of us.

Ignoring all of the technical reasons this wouldn't work, seriously, do you guys think that if it could be done this easily we would have created the complex income tax system. It's complicated for a reason, taxing people effectively is extremely complex.

Quote :

"that doesn't mean he "mopped the floor" with them, though"

I did. The thread got taken out on one of the wipes, and I can't find the original, but I'll go from memory.
My main problem is that it removes the stabilization factor income tax provides which helps steady inflation and recession. My additional problems were that it is regressive simply by nature (regressive means more than "bad for the poor"), and that it provided a good number of loopholes for businesses due to the wide definition of intermediate goods.

7/21/2006 6:08:14 PM

It's an economically dangerous tax design that encourages savings and discourages consumption. Its bracket scale is bottom-heavy, and it would lead to greater class disparity.

The IRS can be slimmed down through other tax systems, although it isn't substantially large so as to be a drain on the economy.

7/21/2006 6:10:49 PM

Quote :

"although it isn't substantially large so as to be a drain on the economy"

This is probably my favorite arguement of theirs. It's essentially akin to "Let's get rid of cars so we won't have to spend all this money on roads!"

7/21/2006 6:13:35 PM

If this system was ever instituted, our government would collapse within a year.

7/21/2006 6:39:09 PM

the only successful countries have systems like this.

in fact, im sure we have plenty of real life examples of Libertarian success in the world.

in truth, as nice as this sounds, I doubt it would accomplish its best objectives.

and i love how it is assumed that all liberals all love tax increases and tons of fed. government programs. there are no variations on the theme.

[Edited on July 21, 2006 at 7:28 PM. Reason : .]

7/21/2006 7:26:33 PM

sales tax is regressive. more sales tax is more regressive.

end of story.

7/21/2006 7:49:31 PM

luxury taxes are progressive, however.

If we set a tax-free limit on items that cost a certain amount (inflation adjusted every year) and also made other items completely tax free (food, for instance) then it would not be regressive

7/21/2006 7:52:45 PM

^ hmmm. maybe....

and all that sales tax complexity could perhaps create some jobs for the income tax accountants who were put out of work.

7/21/2006 7:58:53 PM

Quote :

"If we set a tax-free limit on items that cost a certain amount (inflation adjusted every year) and also made other items completely tax free (food, for instance) then it would not be regressive"

Then you're going to have an all out cockfight of businesses lobbying to get their item tax free.

But I'm fairly sure your system wouldn't be completely progressive. It still taxes consumption which is proportionally more for the poor. Even the poor have to buy expensive things, houses, cars, etc.
It would be substaintially better than fairtax, but I'm fairly sure these and other drawbacks would make it less effective than income tax.

7/21/2006 8:16:26 PM

Quote :

"nationalized healthcare"

bastard socialist

j/k, i agree

7/21/2006 8:49:39 PM

this would create a MASSIVE black market

7/21/2006 9:17:34 PM

Just got back in....

Quote :

"The urge to sneak the car/stereo/TV out the back door of the store is too much."

I, as a business owner, am not going to risk losing my livelihood by letting you get a good deal by breaking the law. Will there be cheating with the FairTax..you bet. Will it exceed the level of cheating we have now with the income tax? With the FairTax, the gov't will have a much smaller group, retailers, to keep an eye on instead of the millions of individual tax-filers.

The problem with a VAT is visibility. Politicians can easily hide all sorts of shenanigans into a VAT system since it is so hard for the average person to understand. A sales tax is very visible, and you know the minute some politician is trying to raise it.

Quote :

"It has nothing to do with my ideology"

It has everything to do with Kris' ideology. As a communist supporter, the last thing he wants is for our capitalistic system to succeed. Wasn't one of Marx's steps to communist nirvana the existence of a severely progressive income tax? Communists and socialists will fight the FairTax to the bitter end.

Kris tried out his charts and arguments on the FairTax forum, where there are people there much more knowledeable than I. After they cut apart his argument, I don't remember seeing him respond again. Pity..It would've been very interesting.

Quote :

"Its bracket scale is bottom-heavy, and it would lead to greater class disparity."

What do you mean by this statement? Please clarify.

Quote :

"in fact, im sure we have plenty of real life examples of Libertarian success in the world. "

The bill's author is rep John Linder, a Georgia republican. The bill has over 50 co-sponsors. The National Libertarian Party does not support the FairTax (mainly becasue of the old "all tax is theft" spiel)

Quote :

"sales tax is regressive"

The most regressive tax that punishes the poor the most is the Social Security payroll tax. The rebate feature removes regressivity from the FairTax. The poor pay zero tax.. how much less regressive can you get? The rest of us also get monthly rebates of fed sales tax up to the poverty level.

Quote :

"Then you're going to have an all out cockfight of businesses lobbying to get their item tax free."

This is true. Very little is exempt. I'm not positive, but I think spending on education is exempt...and that's about it.

Quote :

"Even the poor have to buy expensive things, houses, cars, etc."

The poor shouldn't be buying expensive things like houses and cars until they can afford it. The FairTax allows everyone to control their tax payment..by taxing consumption. It will be easier to save up for houses and cars because you get your whole paycheck. Spend less..less taxes. And the really poor who have to spend all their money each money on necessities won't be paying any fed tax, including the most regressive of all taxes..the payroll tax.

Quote :

"this would create a MASSIVE black market"

This response from the FairTax Forum explains better than I can....

Quote :

"Likewise, your argument that a national sales tax would lead to a huge black market and overseas shopping holds no water when held to the light of the research. But first, let’s be honest… no tax system will ever be completely free from tax cheaters. If someone can find a way to cheat they will do so. But, the IRS has admitted that in 2004, the last year data was available, somewhere between $250 billion and $500 billion was lost to non-compliance in the income tax system. And this doesn’t even count the billions of dollars lost due to such illegal activities such as the drug trade and prostitution. Right now, the IRS collects taxes from around 180 million individual Americans and all businesses. Under the FairTax only about 15 million retail businesses would collect the FairTax at the checkout counter. They will retain ¼ of 1% of all taxes collected as an administration fee. Just try to get Sears or our local supermarket or even your mom & pop strip-mall shoe repair business to give you a pass on the sales tax and see how far you get. State sales taxes are collected now by 45 states and the District of Columbia. The state’s sales taxing authority will collect the tax from those retail businesses and retain a ¼ of 1% of all taxes collected as their administration fee. With less than 16 million businesses to collect from, the states would have an easy time policing tax collection as they already have the agencies in place for that purpose. "

[Edited on July 21, 2006 at 10:01 PM. Reason : .]

[Edited on July 21, 2006 at 10:02 PM. Reason : spelling.. arggg!]

7/21/2006 10:00:03 PM